Concerns emerge over Irish-founded Prepaid Financial Services

Shares in new owner EML Payments suspended in Sydney on ‘regulatory’ worries

EML agreed originally to buy Prepaid Financial Services, which was founded by Co Meath couple Valerie  and Noel Moran in 2008, for an upfront payment of AUS$453.6m. File photograph: The Irish Times

EML agreed originally to buy Prepaid Financial Services, which was founded by Co Meath couple Valerie and Noel Moran in 2008, for an upfront payment of AUS$453.6m. File photograph: The Irish Times

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Shares in Australian fintech EML Payments were suspended in Sydney on Monday as it raced to deal with a notification from the Central Bank of Ireland highlighting “significant regulatory concerns” surrounding the Irish-founded Prepaid Financial Services (PFS) it acquired last year.

EML agreed originally to buy PFS, which was founded by Co Meath couple Noel and Valerie Moran in 2008, for an upfront payment of AUS$453.6 million (€289 million in late 2019) with the equivalent of an additional €60 million subject to the company hitting certain earnings targets.

However, EML secured a €121 million discount on the purchase price before the deal closed in March last year due to the “economic realities” brought about by the Covid-19 crisis.

EML said in a statement to the Australian Securities Exchange (ASX) on Monday that it wanted to suspend trading in its shares until Wednesday morning, pending the release of “an announcement”.

It told the ASX said the trading stoppage was being sought “to facilitate an orderly market in EML’s securities pending an announcement in relation to significant regulatory concerns notified by the Central Bank of Ireland, received by EML on Friday 14 May 2021, relevant to the Prepaid Financial Services business”.

A spokeswoman for EML declined to comment beyond the ASX statement. “When we are in a position to provide more information, we will do so via the ASX announcements platform and the information will be publicly available at that time,” she said.

Efforts to reach Mr Moran, who controlled more than 81 per cent of the company with Ms Moran before the EML deal, were unsuccessful.

Firm founded by the Morans

A spokeswoman for the Irish Central Bank said it “cannot comment on any regulatory or supervisory engagement with the firms it regulates”.

PFS was founded by the Morans in London in 2008. It became one of Europe’s largest issuers of e-money with a presence in 25 countries by the time it was sold, with bases in Trim, Co Meath, Malta, London and Manchester.

In March, the PFS, Mastercard and Allpay provisionally agreed to pay fines in the UK totalling more than £32 million (€37.2 million) for their alleged role in a cartel exploiting prepaid cards used to distribute welfare funds to the homeless and victims of domestic abuse.

The trio engaged in anti-competitive behaviour by agreeing not to compete or poach each others’ clients, said the UK’s payment systems regulator in its preliminary findings of March 31st. Two other firms also accused of wrongdoing, APS and Sulion, have not reached a settlement, it added.

PFS’s provisional fine amounted to £1 million, well below the £5 million contingency that was set aside for an expected penalty when the business was sold to EML.